Modifications in morphological and plasmonic properties of heavily doped Ag-TiO2 nanocomposite thin films by ion irradiation have been observed. The Ag-TiO2 nanocomposite thin films were synthesized by RF co-sputtering and irradiated by 90 MeV Ni ions with different fluences. The modifications in morphological, structural and plasmonic properties of the nanocomposite thin films caused by ion irradiation were studied by transmission electron microscopy (TEM), X-ray diffraction (XRD), and UV-Vis absorption spectroscopy. The thickness of the film and concentration of Ag were assessed by Rutheford backscattering (RBS) as ~50 nm and 56 at.%, respectively. Interestingly, localized surface plasmon resonance (LSPR) appeared at 566 nm in the thin film irradiated at the fluence of 1 × 1013 ions/cm2. This plasmonic behavior can be attributed to the increment in interparticle separation. Increased interparticle separation diminishes the plasmonic coupling between the nanoparticles and the LSPR appears in the visible region. The distribution of Ag nanoparticles obtained from HR-TEM images has been used to simulate absorption spectra and electric field distribution along Ag nanoparticles with the help of FDTD (Finite Difference Time Domain). Further, the ion irradiation results (experimental as well simulated) were compared with the annealed nanocomposite thin film and it was found that optical properties of heavily doped metal in the metal oxide matrix can be more improved by ion irradiation in comparison with thermal annealing.